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Blockchain for NASA and IoT, developments in cryptographic products and payments, cryptocurrency exchange hacked | BakerHostetler

[co-author: Jordan R. Silversmith]

The Blockchain effect: NASA, IoT, Supply Chain and state initiatives

Of: Diana J. Stern

On Monday, the NASA Ames Research Center published a document on an authorized blockchain structure addressing privacy and security issues for FAA air traffic data using the certification authority, intelligent contract support and channels. of secure communication. The impetus for the proposal is that the FAA imposes the national adoption of a transmission-dependent automatic transmission system, but, as the document states, the system leaves a question mark around certain safety issues. Always in safety, a report found that only about 48% of companies are able to detect a violation of their IoT devices and that by 2023 there will be more than 20 billion connected devices. Moreover, out of 950 IT professionals interviewed, 23% believe blockchain could be the answer to protect IoT devices. The results of the study suggest that 91% of organizations that do not use blockchain technology will probably now consider it in the future.

In the supply chain initiatives, a major international automaker based in the United States and other companies in various phases of the mineral supply chain have launched a pilot project to monitor responsible production, trade and processing of cobalt. The ultimate goal is to explore a blockchain platform open to the entire industry for tracing minerals used in consumer products. The World Wildlife Fund has also been active in the supply chain this week. WWF Australia has launched a tool that allows businesses and consumers to track food using QR codes and blockchain technology. In other corporate news, a major US-based supply chain and supply chain management company has made a strategic investment in Inxeption Corporation, a blockchain-based B2B e-commerce platform that helps traders increase their online sales.

A large energy company in Spain uses the Energy Web Foundation, a blockchain-based platform specifically created for the energy industry, for a pilot renewable energy project. One of the positive aspects of the company from the test drive was to use blockchain technology to issue a guarantee of origin so that consumers have a verifiable certificate on the source of energy they consume. The largest cargo shipping company in Israel, Zim, has piloted a blockchain platform for electronic bills of lading for over a year, and is now making the offer available to its customers for selected operations. Zim said the value proposition includes improved workflow and digitalisation of paper-based processes. Finally, Vermont issued an RFI to check if blockchain technology can improve the efficiency, accuracy, security and transparency of regulatory processes. The pilot program will allow the new insurance companies prisoners to register with the state.

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Blockchain ads from traditional financial institutions and emerging platforms

Of: Robert A. Musiala Jr.

On Monday, one of the largest banks in the world announced that in 2018 it liquidated $ 250 billion in foreign currency transactions using an internally developed blockchain platform which, among other benefits, enabled the bank to verify the transaction without external confirmation . Meanwhile, an important Swiss investment bank has announced that it is launching a cryptocurrency custody service aimed at institutional market participants. In commodity markets, the Vakt blockchain commodity trading platform, which operates on the Quorum blockchain, has added a major US multinational energy company to its platform and industrial consortium. On January 10th, the Bitwise Asset Management cryptoasset index provider filed a registration statement with the SEC requesting the approval of a physically held, listed bitcoin fund (ETF). According to a press release, the proposed ETF will differ from previous ETF proposals because it will use the regulated third party custodians to maintain its physical bitcoin.

Reportedly, last week the tZERO token trading security platform announced that it has started issuing security tokens in custody of investors who purchased tokens during a private offer completed in August 2018. Another This week's announcement stated that Aspencoin, a securitization the token associated with the St. Regis Aspen Resort, will be migrated to the Securitize platform to enable multi-platform trades. In Europe, the Belarus-based blockchain technology company Currency.com has issued a press release stating that it has launched "the first fully functional trading platform in the world for tokenized securities". According to the press release, the platform will offer "a token version of a contract for the exchange of a specific capital, commodity or index."

In the recently published discoveries, a study by MarketWatch looked for the ESA's Edgar database and identified 287 Form D records that contained key terms indicating that funds raised by accredited investors were about an initial coin offering (ICO). The study estimated that the total value of Reg D exempted ICO fund-raising events at $ 8.7 billion for the year 2018. Another study recently published by BitMEX analyzed ICO tokens released to ICO team members. The study found that the total value of tokens held by members of the ICO team decreased from $ 24 billion to $ 5 billion, mainly due to the fall in market prices for tokens.

For more information on the topics covered in this week's post, see the following:

Cryptocurrency exchanges and payment providers announce new products

Of: Joanna F. Wasick

The ways to exchange cryptocurrency continue to grow. Bittrex, a cryptocurrency exchange based in the United States, has announced the launch of an over the counter (OTC) trading desk that will support the nearly 200 cryptocurrencies currently offered by the exchange. According to Bittrex, the OTC will allow the parties to make transactions directly, unlike the exchange trading, which corresponds to the purchase and sale of orders through a trading book. Binance, another major exchange, has announced its new fiat-to-crypto exchange, which will be based in the island of Jersey. "Jersey Binance" will allow traders in Europe and the UK to trade Bitcoin and Ethereum against the British pound and the euro. The new reports also reflect a continuous increase in the number of ATMs of cryptocurrency, citing approximately 4.9 ATMs installed per day worldwide (with more installations in the United States than in any other country). Being paid in cryptocurrency by an employer may soon become even easier. Bitwage, a payment service for cryptocurrencies and wages, has announced a new system that allows companies to pay salaried employees in cryptocurrency. The system includes a new crucial feature that converts a portion of funds into dollars, so that employers can pay the withholding tax. And a cryptocurrency supported by fiat has started the new year with positive news. The financial corporation of the cryptocurrency Circle has released the third revision of its stablecoin USD Coin, supported by frie. The audit, conducted by a major US audit firm, confirmed that USDC tokens do not exceed the company's legal reserves.

According to recent reports, the daily volatility of bitcoin is down 98% compared to last year. This decline in volatility is accompanied by a significant fall in price: the price of bitcoin has fallen by almost 68 percent compared to this period of the last year. Some predict that the decrease is here to stay: the spot price of bitcoin is currently higher than its futures price. Regardless of price, a company makes sure that cryptocurrency owners can keep their wealth in style. A luxury Swiss watchmaker now offers "Blockchain Watch", a handcrafted watch with a built-in crypto-wallet. The watch is priced over $ 100,000 and can only be purchased with bitcoins.

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Discovery of Cryptocurrency Hacked, Crypto-Malware and Wallet Vulnerabilities

By: Jordan R. Silversmith

On January 15, several news agencies reported that a cryptocurrency exchange in New Zealand, Cryptopia, had gone offline after being hacked, with about $ 2.44 million of ethereal tokens and about $ 1.18 million centrality tokens transferred on unknown portfolios on Jan 13. Shortly after the hack, the exchange of cryptocurrency Binance crashed and quarantined some tokens sent to his exchange from the presumably responsible entity. In related news, gate.io has announced that a value of $ 100,000 of cryptocurrency stolen from its exchange during the 51% attack on Ethereum Classic would be returned by the hacker who took it. Gate.io mentioned in his post that the hacker may have been a "white hat" hacker who was trying to prove security risks.

The recent and very hard forks of Ethereum Nowa (ETN) and Ethereum Classic Vision (ETCV) have been tarnished by malware that appropriates the private keys of users who try to redeem their forked coins. Meanwhile, the malware poses as a movie on the popular torrenting site. It is said that Pirate Bay has triggered a chain of nefarious activities that include cryptocurrency theft. In addition, a recent report highlighted vulnerabilities in numerous cold storage cryptocurrency portfolios, including Trezor One, Ledger Nano S and Ledger Blue. The report, entitled "wallet.fail", outlined the research on the vulnerabilities of the most widespread hardware portfolios, which are generally considered safer than wallets hosted online.

A recent wave of ransomware attacks known as Ryuk ransomware, estimated to have earned $ 2.5 million in Bitcoin, are likely to come from Russian cybercriminal activities rather than from state-sponsored North Korean actors, the hard-shelled encrypted news site reported on 14 January. a recent report from ZerohedgeRussia is preparing to make major investments in bitcoins as part of a broader trend in which the country has liquidated its holdings in US Treasuries and invested in other foreign currencies and commodities such as gold. One source said that Russia intends to buy up to $ 10 billion in bitcoins, starting in February. Russian government officials rejected this request.

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International Regulators Target Cryptocurrency Exchanges, ICOs and Tax Compliance

Of: Simone O. Otenaike

Bitmex, a Bitcoin-based exchange of derivatives in Hong Kong registered in the Seychelles, said it had deactivated the trading accounts of customers from the United States and the Canadian province of Quebec this week. Bitmex has also imposed similar restrictions on customers from North Korea, Iran, Syria, Cuba, Sudan and Crimea, to avoid violating anti-money laundering and anti-terrorism laws. Coincheck, a Japanese cryptocurrency exchange registered at the Kanto finance office, recently lost $ 530 million in token altcoin due to a hack. Despite the loss, the Japanese financial services agency granted Coincheck permission to continue operations in the country. According to a recent report by the Ministry of Science and ICT of South Korea, the Internet & Security Agency and the Ministry of Economics and Finance, only a third of the cryptocurrency exchanges meet government management standards network, security and portfolios. The South Korean agencies inspected a total of 21 cryptocurrency bags from September to December 2018 and examined 85 different aspects. Only seven of the cryptocurrency exchanges met the applicable standards: Upbit, Bithumb, Gopax, Korbit, Coinone, Hanbitco and Huobi Korea.

Also this week, the finance minister of Malaysia announced that the Securities Commission plans to regulate the initial offer of coins and the trade in cryptocurrencies starting from January 15th. Meanwhile, China's cybernetic administration (CAC) has introduced new rules for blockchain companies operating in China. The CAC guidelines require companies to allow authorities to access archived data and obtain an identity card or mobile phone number from their users – new regulations will be effective on February 15th. In Spain, the Spanish National Securities Market Commission added 23 cryptocurrency exchanges not authorized to its users. list of warnings this week. The Danish Tax Council will soon allow its tax office to access information on cryptocurrency traders. At the request of the Inland Revenue, cryptocurrency exchanges must produce information on traders, including exchanges, names and addresses and registration numbers of central persons, for the period between 2016 and 2018. The Agency Danish Revenue ultimately plans to use this trader's information to determine if citizens are paying taxes on any profit.

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Tax analysis: cryptographic theft; Market waste – strategies to manage losses

Of: Roger M. Brown is Nicholas C. Mowbray

It is difficult to read about the developments in the cryptocurrency space without seeing articles about the theft of tokens, the supply of post-initial coins that are declining in value and the volatility of the market. These are recurring themes reported in our blog posts Blockchain Monitor. According to a recent survey, US investors who sold bitcoins collectively realized losses of about $ 1.7 billion, but only 53% planned to report bitcoin gains and losses on their tax returns.

Like most commercial events, tax planning presents ways to deliver value, reduce risk and / or improve operational efficiency for participants in the encrypted market. Adequate tax planning can yield positive results and should be taken into consideration by investors with significant encryption activities on the market. A favorable tax treatment can be obtained by addressing the fact that cryptographic assets are capital goods for market operators who are not resellers. This means that gains and losses are not "ordinary" from a tax perspective, which in turn means that any net loss of capital of a single tax payer can be reported to provide an annual deduction of $ 3000 only until the carryforward it is exhausted (assuming there are no capital gains in those years or in progress).

There are many strategies to minimize the inefficiencies related to the characterization of gains and losses as ordinary capital lines. Some of these include:

  • Disposal of cryptographic resources in such a way as to create an ordinary deduction rather than a loss of capital.

  • Keeping the cryptographic assets in certain entities where the character is less relevant and the gains and losses compensate one another without taking the character into account.

  • Planning to obtain dealer status in which cryptographic assets are considered to be of an ordinary nature.

Depending on a taxpayer's investment strategy, there may be a trade-off between the tax rates on long-term capital gains and the tax rates for ordinary income. However, these rates do not apply when a cryptographic asset is held for less than a year. Furthermore, avoiding the inefficiency of the mountains of repercussions on capital losses could justify the adoption of a strategy that is not based on a long-term holding period.

Separately, there may be other considerations when cryptographic resources are held by a national company. This is due to the fact that the capital losses can be brought back by three years, providing reimbursements of the previous taxes paid on the capital gains. In addition, companies can claim capital losses for only five years, after which they disappear (while individuals can continue their capital losses indefinitely). Therefore, companies may have more pressure to pursue strategies that avoid capital losses.

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